It may be a controversial tactic, but one leading broker has established a rate buydown system specifically tailored to switching lenders at renewal. Dustan Woodhouse
of Dominion Lending Centres
With around 1.1 million privately owned properties in B.C., about 50 per cent of which have mortgages on them, there are arguably more than 100,000 renewal transactions up for grabs in my home province each year. This is a significantly larger market than purchase transactions, and one with far less pressure and much longer lead times than most refinance and purchase transactions tend to entail.
Nice work if you can get it.
That, for me, has been the challenge since day one. The statistics we often hear are that lenders retain around 70 per cent of existing clients at the time of renewal. One popular broker lender boasts a current renewal retention rate of 91 per cent.
In other words, this is not an easy nut to crack.
As a broker starting out in 2008, I knew the above numbers, all of them, yet still made initial efforts to win some renewal business as the opportunity arose. However I quickly learned that in the 11th hour, in particular once the payout statement was ordered, lenders would get far more aggressive than the market rates offered in the initial renewal letters sent to their clients. Many clients would wind up sticking with their existing lender at that point. The time, and often the money I had invested in the file, was all for naught.